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David Cameron announces banking industry inquiry

Prime Minister David Cameron has announced a parliamentary review of the banking sector in the wake of the Barclays inter-bank lending furore.

He told the House of Commons that the manipulation of the interest rates had been a "scandal".

The comments follow news that the Serious Fraud Office is considering whether to bring criminal charges.

Barclays has announced a "root and branch review" after receiving a fine of £290m ($450m).

Mr Cameron said the full parliamentary committee of inquiry would be headed by the chairman of the Treasury Committee, Andrew Tyrie.

"This committee will be able to take evidence under oath, it will have full access to papers and officials and ministers including ministers and special advisers from the last government," he said.

Mr Cameron said the review should ensure that the UK had the "toughest and most transparent rules of any major financial sector".

He added: "Bankers who have acted improperly should be punished," and it was important to learn the lessons of the affair.

But Labour leader Ed Miliband said the review did not go far enough, calling instead for an inquiry which was independent of bankers and politicians.

"I'm not convinced by his way forward because I do not believe it measures up to the scale of what is required," he said.

Prosecution

The SFO said it was working closely with the Financial Services Authority and was now "considering whether it is both appropriate and possible to bring criminal prosecutions".

Meanwhile Barclays' chief executive Bob Diamond said in a letter to staff that he would "get to the bottom" of what happened and resolve it.

"We are being thorough and robust while also ensuring that we undertake due process.

"We are reviewing those directly responsible and those in supervisory roles. We have the full range of tools at our disposal, from clawing back compensation to asking people to leave the bank," he said.

Marcus Agius earlier confirmed his resignation as chairman of Barclays over the scandal, saying: "the buck stops with me".

Mr Miliband said earlier on Monday that Mr Diamond, who was head of Barclays investment bank BarCap during the crucial period, should resign.

The Labour leader said it was important to restore trust in British banks. "I really don't think that can be done by Bob Diamond," he said.

Deputy Prime Minister Nick Clegg told the BBC: "We need people in [banking] who take responsibility when things go wrong, not just take the big bucks when things go right."

Former Barclays director Baroness Wheatcroft told BBC News that Mr Agius was currently "carrying the can" but said Mr Diamond's resignation was now "inevitable".